 "Flows into balanced funds double in FY16")
Inflows into balanced schemes offered by mutual fund (MF) houses saw doubling of investor flows in 2015-16.
Such schemes invest between 60 to 80 per cent in stocks and the rest in debt instruments. As markets turned choppy after a rally in the preceding financial year, investors opted for balanced funds to brave the volatility, say experts. Net inflows in these schemes were Rs 19,743 crore in 2015-16, from Rs 9,826 crore in 2014-15.
MFs saw nearly half a million new investors investing in this category and the overall base swell to around 2.5 million. Several fund houses aggressively pushed these schemes, as a tool to beat market volatility and generate good return.
Some of these are ICICI Prudential Balanced Advantage Fund, HDFC Balanced Fund, Franklin India Balanced Fund, SBI Magnum Balanced Fund and Tata Balanced Fund. The three-year annualised return of balanced funds with equity orientation is 16.2 per cent.
Steady inflows over the past two years, coupled with better returns vis-a-vis the diversified equity funds, pushed the assets under management (AUM) of balanced funds to a highest-ever level of Rs 39,146 crore.
Many analysts feel the Indian market offers limited upside this year. This means such funds can continue to offer value to investors, say experts.
Says S Naren, chief investment officer at ICICI Prudential MF, “We recommend defensive equity investing, with products in the balanced and dynamic asset allocation category as suitable ways to ride the volatility. These funds invest in equities when the markets are cheap and book profits when the markets are rising, limiting risk and aiming to provide good returns."
Sundeep Sikka, chief executive officer at Reliance MF, says: "In the past few years, investors have matured and understand the nuances of investment in volatile times. Balanced funds have emerged as one of their favourites."
There are 28 schemes in the category and the assets managed are nearly three per cent of the sector's overall AUM.
